PACE Yourself: Wall Street Eyes the Business of Keeping Elderly At Home

Wall Street firms are becoming very interested in an obscure Medicare program designed to provide medical and social services to the elderly in their own homes.

Whether that’s a good or a bad thing depends on who you ask.

The program, called the Program of All-Inclusive Care for the Elderly (PACE), is a win-win for seniors and the federal budget: it keeps the elderly in their own homes and out of nursing facilities, which is almost universally preferable for seniors and is also less expensive for Medicare and Medicaid.

PACE has some private equity and venture capital firms seeing dollar signs.

From the New York Times:

In January, at the health care industry’s leading matchmaking event, the J.P. Morgan Healthcare Conference in San Francisco, word quickly spread that PACE programs could save states and the federal government up to 20 percent a patient. And suddenly, the program became one of the hottest topics of discussion.

“Every other conversation was, ‘What do you think we should do with PACE?’” said Bill Pomeranz, a managing director at Cain Brothers, who helped finance the nation’s first PACE program in the 1970s.

The message appeared to travel down Highway 101 as well, to the heart of the technology industry. At least eight start-ups have circulated PACE-related pitches to Silicon Valley venture capital firms, hoping to tap into new capital and create technology-enabled versions of the program.


The pitches circulating among investors envision technology-enabled programs that would rely, in part, on video visits and sensors. Some studies have found that telemedicine can help patients better control certain chronic conditions and reduce health care spending. But those technologies are largely untested in geriatric care.

“The entrepreneurs coming into this space all believe there are much lower-cost ways to check on patients every day than driving them all to one building,” said Mr. Kocher, who is now a partner at the venture capital firm Venrock, which invests in health care companies.

But some are skeptical. From the Times:

These sorts of pitches, while promising, have not been universally welcomed. They have even been used as evidence that opening PACE up to for-profit companies might lead to unwanted consequences.

Veteran PACE providers, for example, are skeptical of virtual medicine’s benefits to seniors, especially those with dementia.

“Socialization goes a long way to improve the health of the participants we serve,” said Kelly Hopkins, president of Trinity Health PACE, a nonprofit health system that operates PACE centers in eight states. “It’s naïve to think you can do it virtually.”


Even the program’s supporters acknowledge that the movement needs fresh momentum. But they worry that commercial operators will tarnish their image in the same way many for-profits eroded trust in hospice care and nursing homes.

As recently as 2014, government inspectors found that for-profit hospice companies cherry-picked patients and stinted on care.

In addition, elderly patients with dementia and chronic ailments have frequently been targets of abuse and neglect at nursing homes, something advocates for the elderly say is correlated with the increased commercialization of that industry.

“I’m not wild about every knucklehead running around trying to do PACE,” said Thomas Scully, former Medicare administrator under President George W. Bush. “I would rather keep it below the radar.”

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